In real estate, there’s a term used to describe the value of different investments – their ‘capitalisation rate’ – often calculated as the ratio between the net operating income produced by an asset and the original capital cost or it’s current market value. Essentially measuring the potential of return.
In his ‘Revisionist History’ podcast, Malcolm Gladwell discusses the concept of the human ‘capitalisation rate’ – defining it as “the percentage of people in any given situation who have the ability to make the most of their own potential.” Despite the odds against them, these people find a way to compensate for their shortcomings.
And it occurred to me that we could apply this concept very easily to hospitality marketing, and answer once and for all, the question of whether Eat Out to Help Out is our only option – a necessary blessing, or an impending curse.
To answer this we must look at our businesses, and honestly decide whether we are making the most of ourpotential, and assess whether despite the odds against our industry at the moment – particularly in areas dependant on offices, we are making the most of ways designed to compensate for our shortcomings.
I’ve heard countless pleas for the extension of EOTHO through September, and even more talk suggesting EOTHO will be even more crucial as the appeal of outdoor dining wears thin and an unpredictable British Autumn and Winter sets in.
And while I completely understand the instant impact of EOTHO and empathise with the comfort it brings (I’ve sat in enough boardrooms debating how to drive covers – and fast), there is massive potential in so much of what we already have available. And if we take action now, we can see the benefits before the first Halloween displays go up.
So, before you push the button on another few months of EOTHO style discounts, ask yourself whether you’re making the most of your business’s marketing potential.
1. Are you optimising your acquisition?
Your data can tell you who is most important to you as a customer, and ‘track & trace’ is likely to be driving unprecedented levels of insight. By defining your most valuable customers according to their frequency, recency, loyalty as well as other desirable behaviours we can find others who share the same characteristics – who may not have already engaged with your brand. Even if you’re already absolutely nailing it and capturing 5% of your market, that gives you 95% of opportunity. And because targeting your advertising through social, SEO and digital ads (and I mean properly targeting, not just using the broad ‘generic targets’ offered by Facebook etc), is so effective your ROI could be as attractive as your sales numbers.
2. Are you set up for conversion?
You’ve probably got tens or hundreds of thousands of contacts sitting in your CRM, but how often do you segment them by behaviour to ensure they’re receiving the content most likely to get them to hit the ‘book now’ button? Your CRM is an absolute oasis of opportunity, able to drive both frequency and spend when it’s used correctly.
And are you automating your communications and optimising your online customer journey to push people along the booking or purchase funnel? Whether you’re aiming for bums on seats, or pork chops in the post – automating your journey can turn interest into action – in an instant.
3. Are you prompting people to return?
Assuming your ops are on point and your customers had a brilliant time, communicating immediately afterwards when the warm and fuzzy feeling is still fresh in mind is the ideal way to keep your brand in your customers thoughts. And by using your data to get to know your customers really well you can offer the perfect mix of inspiration and incentive to revisit, in the most discreet of ways.
We have an opportunity now to look within our businesses, and make the most of the potential lying in our marketing technology and data, setting us up for success – despite the odds against us.